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Financial News
5 Tips For Organizing Paperwork for a Smooth Tax Filing Process
Updated: Thursday, January 19, 2012 - 2:45 PM
There's no better time to sort through the growing pile of papers in your home office than when you're preparing to file year-end taxes. While organizing paperwork and personal files can seem like a daunting task, it certainly doesn't need to be. Master Lock has provided the following tips for organizing and safely storing important documents for a smooth tax filing process and more organized year.
"Eliminating unnecessary paperwork and storing tax files in one organized, secure place is vital to a stress-free tax filing process," said Rebecca Smith, vice president, marketing for Master Lock. "By creating and maintaining a master storage system, individuals can not only ease the tax filing process, but also enjoy a feeling of preparedness year-round."
1. Purge the paperwork
First things first-clear the clutter. Go through all of your paperwork and eliminate anything you no longer need, shredding identifying documents to protect against identity theft. Get rid of expired warranties and year-old receipts and bank statements.
2. Safely store crucial records
Designate a specific storage space for vital documents including birth certificates, marriage licenses, passports, wills and social security cards. These items, as well as any important memorabilia, should be stored in a locked, fire retardant box. Not only will you always know where these items are, they'll be safe from home mishaps.
3. Create a tax file
Create a separate file for all of your tax documents. Organize this file into 10 categories: income (pay stubs, W-2s, interest statements), medical (medical expenses and health insurance out-of-pocket), donations (cash and non-cash donations), real estate (interest statements from mortgage, tax assessments), child care (payment receipts), tax correspondence (important IRS or state revenue service letters), student loans (statements of payment), miscellaneous receipts (any receipts that might be needed for deductions), payments (records of advance payments) and old tax papers (old tax returns). Continue to use your tax file year-round, and you won't have to scramble for these documents when it comes time to file next year.
4. Back up everything
Make digital copies of important documents and store them in your fireproof box on a zip or thumb drive. Use a secure online organization and security solution to store log-in and password information for bank accounts and credit cards as well as lock combinations or key numbers to your file boxes. Consider appointing a guardian as an additional security measure who knows where and how your records are stored for easy access in your absence.
5. Make it a tradition
Select a specific time of year (perhaps when tax time rolls around again) and make your review of these records an annual occurrence. This will ensure your information is streamlined and up-to-date and that finding or organizing this information is never an overwhelming process again.
